Legislative staff present $700 million structural surplus, governors budget adds one-time transfers

Good morning, Chairman Growe and members of the committee. My name is Keith Bybee. I'm the division manager of budget policy Analysis for Legislative Services Office. Today my presentation is going to cover, FY 2025 and FY 2026 budget overview. (Keith Bybee, Legislative Services Office)

Legislative staff told the Joint Finance-Appropriations Committee (JFAC) that Idaho's general fund revenue picture has shifted upward since the fall forecast and the governor's budget increases the baseline for 2025 and 2026. Bybee said the state recorded $5.7 billion in general-fund collections in 2024 and that the governor's recommendation lifts 2025s baseline revenue to about $5.9 billion. Using those figures and the governor's projected expenditures, staff estimated a structural balance of roughly $700 million across the next two fiscal years.

Why it matters: that structural balance is the gap between ongoing revenues and ongoing obligations used by budget-makers to test whether recurring spending can be sustained. Bybee told the committee that a roughly $700 million delta gives policymakers room to consider tax relief, ongoing program increases or transfers to savings, but that choices will determine the state's long-term trajectory.

Key figures and mechanics: Bybee walked members through the cash-reconciliation report prepared for the budget book. He listed the components that produce net revenues available for the year: beginning cash balance, projected revenues, and transfers to other funds. For FY2025 the governor's proposal showed an ending cash balance of about $338 million. For FY2026, the governor's recommended program and enhancement package produced a projected ending balance in the low hundreds of millions (the presentation listed $227 million as the FY2026 ending balance under the governor's recommended totals).

Transfers and earmarks: the governor's proposal includes transfers out of the general fund for spending and saving. The presentation itemized transfers that include transportation-related transfers, a proposed $60 million transfer to a fire suppression deficiency account, and a proposed deposit to the budget-stabilization fund. Bybee said the governor's plan would transfer roughly $477.3 million to other funds in total, offset in part by receipts from the closeout of a prior bond-levy equalization fund.

Program maintenance and enhancements: staff summarized how the budget is built: a 2026 program-maintenance base of roughly $5.3 billion, program-maintenance adjustments (benefit changes, contract inflation, statewide cost allocations, employee compensation and public-school support) totaling about $177.5 million, and governor-requested enhancements of roughly $242 million. That combination produced a governor-recommended general-fund maintenance and enhancements total near $5.65 billion (about a 7.4% increase year-over-year in total appropriations from the general fund in the presentation).

Revenue drivers and risks: Bybee reviewed the COVID-era revenue spike driven by federal relief and rapid in-migration and explained why the state does not expect to revert to the pre-2020 trend. He cautioned that forecasting choices (pessimistic, baseline, optimistic) affect how much of the current balance is treated as reliable ongoing revenue. He also reminded members that some increases in the governor's package are funded with one-time cash.

Next steps and context: Bybee told members that JFAC will move from this front-end overview into workgroups and agency hearings to consider program-maintenance requests and enhancements. He emphasized that the legislature must decide how much of the structural balance to use for tax relief, new spending or transfers to savings.

Ending: The committee did not take any formal votes during the overview. Members asked for follow-up details on specific transfers and on which interest earnings and off-budget funds can be reported for legislative review.